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Evening Standard (15/6) On The Demise Of Cheap Money...


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Some real bear food in tonights Evenin' Stannit.

First this article about the recent dramatic rises in fixed rate mortgage deals, across the market. The 820k deals that reset between August and December and the 2m due to end in the next two months are going to leave folk with a few headaches, as events in the bond markets mean the cheap fixess are becoming more expensive, out of all proportion to the BoE base rate changes.


The second piece, not on their website went into more detail about recent events in the bond markets, lamenting on how cheap money was fun, but it will not last.

Although the discredited CPI has slipped back a little, the bank will not repeat their previous mistake of letting housing boil over again. Inflation is playing a leading role in monetary policy decision making and it will need continued action to tackle it.

US bonds took fright at signals from the Fed that rates ain't falling any time soon. The next acts in the play involve a return to fundamentals i.e pricing long term debt higher than short term, and then demanding a serious risk premium above government debts.

Hence cheap money is shutting up shop, and there won't be a closing down sale.

Wish I could find a link...

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